ITEM
5.02
Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On
June 17, 2019, Sigma Labs, Inc. (“we,” “our,” “us” or the “Company”) entered into
an employment letter agreement with Frank D. Orzechowski, effective July 1, 2019 (the “Effective Date”), pursuant
to which Mr. Orzechowski has agreed to serve as our Chief Financial Officer, Treasurer, principal accounting officer, principal
financial officer and Corporate Secretary on an “at-will” basis.
Under
the employment letter agreement, Mr. Orzechowski is entitled to (i) an annual base salary of $135,000 (such base salary is
not subject to decrease, but may be increased in the discretion of the Company’s Compensation Committee of the Board of
Directors based on an annual or special case assessments of Mr. Orzechowski’s performance and other factors), (ii) all
benefits that we elect in our sole discretion to provide from time to time to our other executive officers, and (iii) a grant
under our 2013 Equity Incentive Plan (the “
Plan
”) of (1) a five-year stock option to purchase up to 2,500
shares of common stock of the Company, which will have an exercise price equal to the closing price of the
Company’s common stock on the Effective Date, and will vest in full on the Effective Date, and (2) a five-year stock
option to purchase up to 60,000 shares of common stock of the Company, which will have an exercise price equal to the closing
price of the Company’s common stock on the Effective Date, and will vest and become exercisable as follows: 3,872
shares will vest and become exercisable on the one-year anniversary of the Effective Date, 9,000 shares will vest and become
exercisable on the second-year anniversary of the Effective Date, 14,128 shares will vest and become exercisable on the
third-year anniversary of the Effective Date, and 33,000 shares will vest and become exercisable on the fourth-year
anniversary of the Effective Date, provided, in each case, that Mr. Orzechowski remains an employee of the Company through
such vesting date. Such options will be on such other terms and provisions as are contained in the Company’s standard
form nonqualified stock option agreement, and will only be exercisable upon approval by the Company’s stockholders at a
meeting of the Company’s stockholders of an increase in the aggregate number of shares of the Company’s common
stock that may be issued or issuable under Plan, which increase covers the shares of common stock underlying such
options.
Mr.
Orzechowski has over 30 years of financial and operational experience. Since September 2013, Mr. Orzechowski has served as the
Chief Financial Officer of StormHarbour Partners LP, an independent global markets and financial advisory firm. From May,
2013 to August 2013, Mr. Orzechowski served as a contract CFO for Etouches Inc., a cloud-based event management software
company, to assist with financial-related matters in connection with that company’s planned equity financing. Prior to that,
he served as President and Owner/Operator of Four-O Technologies Inc. from August 2009 to December 2012, where he
successfully launched and guided operations for two Cartridge World franchise units in Connecticut. From February 2006
to July 2009, Mr. Orzechowski served as President and Chief Financial Officer of Nikko Americas Holding Company Inc., where
he was responsible for managing all of the support and infrastructure for that company’s U.S. business, as well as investment
manager selection and due diligence functions for its World Series Platform. Mr. Orzechowski began his career at Coopers &
Lybrand in 1982, received his CPA certification in 1984 and received his Bachelor of Science in Business Administration
with a major in Accounting from Georgetown University in 1982.
Mr.
Orzechowski, age 59, has no family relationship with any of the Company’s officers and directors.
The
foregoing description of Mr. Orzechowski’s employment letter agreement does not purport to be a complete description of
the terms and conditions therein. The full text of such agreement will be filed as an exhibit to our Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2019.
On
June 17, 2019, we entered into a transition and separation agreement (the “Separation Agreement”) with Nannette Toups,
our current Chief Financial Officer, Treasurer, principal accounting officer, principal financial officer and Corporate Secretary,
pursuant to which we and Ms. Toups agreed that she will resign from such positions, effective July 1, 2019. Under the Separation
Agreement, Ms. Toups’ employment with the Company will continue through August 15, 2019 (unless earlier terminated), during
which period Ms. Toups will assist in the transition of her duties. After such date, Ms. Toups and the Company intend to enter
into a consulting agreement under which Ms. Toups will continue to provide services to the Company on an as needed basis.